A new report says changes to the Alberta royalty regime will help make Alberta more competitive than its neighbouring provinces for conventional oil investment.
The paper out Monday from the University of Calgary School of Public Policy found that changes to the royalty system will bring the marginal effective tax and royalty rate for conventional oil projects in Alberta from 35 per cent to 26.7 per cent when it goes into effect Jan. 1.
READ MORE: Alberta sets out details for new oil and gas royalty framework
Study authors Jack Mintz and Daria Crisan found the change will switch Alberta from having one of the highest to one of the lowest rates among its peers, including ahead of British Columbia and Saskatchewan.
“The new royalty regime is not only structurally very good and an improvement over the old regime in Alberta for conventional oil, but it actually led to Alberta being more attractive as a place to invest,” Mintz said.
He said the Alberta regime will be more attractive in the sense that it’s “more competitive” than it was before, but added a disclaimer.
“Does that say that people will overall put more investment in Alberta? No. Because you’re going to look at the regulatory framework; you’re going to look at other aspects that will impact on investment, like the carbon policies.”
The study, which pegged B.C.’s rate at 28.7 per cent and Saskatchewan at 32.6 per cent, did not take into account other regulatory and carbon policies that affect competitiveness.
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In July, the Alberta government announced that companies could immediately apply for well projects under the new royalty regime that weren’t already planned.
The new royalty framework left oilsands royalties unchanged and simplified the system for conventional oil and gas wells.
With files from Global’s Tomasia DaSilva